Great Managers Work To Take Calculated Risks

I had a conversation with a successful rancher this week and he mentioned that he was a banker. He quickly clarified that, however, by pointing out that he was an investment banker.

I couldn’t help but notice the important distinction he was drawing, so I asked him about it. He said traditional bankers are risk-apprehensive while investment bankers embrace risk. Thus, he said, investment bankers have a chance to do great things, while a regular banker reluctantly helps others achieve great things. He said he wasn’t casting aspersions against traditional bankers, but pointing out that taking risk was the key to success in life.

We have all heard the sayings of “nothing ventured, nothing gained” and “no risk, no reward.” However, embracing risk requires both the confidence to take chances and a willingness to fail.

I took my boys to a horse show this weekend, and watching them got me to thinking. They would have been scared to death a few years back to compete with the level of competitors that they now compete with on a daily basis. Like sports in general, it’s not the sport as much as what the activity teaches us and allows us to become that is important.

The boys now embrace competition, and the fear and the threat of failure; they aren’t consumed by the risks, because they’re aware of the rewards. As managers, however, failure is often seen as catastrophic and something that defines you as lacking competence.

The thing I admire most about people who hold office, either in organizations or government, is that they have the confidence in their ability to effect positive change. They’re also willing to risk throwing their hat in the ring, knowing that defeat is a real and potentially humbling possibility. Yet they are willing to take the risk.

The avoidance of risk can come from prudent understanding and taking the steps to minimize whatever risk exists, thus accepting the risk that exists while minimizing it. This is a crucial job of all managers.

Another form of avoiding risk stems from fear. It can paralyze managers from taking prudent risks because they fear failure or doubt their abilities. Fear is often mistaken for prudence. There are times to be conservative, but a conservative approach and great successes are rarely linked.

Great managers take calculated risks. They embrace them and have the confidence to overcome them. That is the essential key to risk – not avoiding it, but accepting it and focusing on doing what is possible to maximize the chances for success and minimize the potential for failure.

Risk-averse managers don’t purchase land, expand the cowherd, or invest in equipment, herd bulls, advertising or new ventures. Not surprisingly, they’re loved by their bankers and go unnoticed by investment bankers. Embracing risk for risk’s sake is simply foolhardy, but avoiding risk rather than minimizing risk precludes significant gains.

Pondering my kids’ participation in activities – whether it’s sports, judging, showing animals, etc. – I thought they were learning hard work and other skills. And they have, but the most important lesson is the willingness to embrace the risk that is required to succeed. Perhaps raising kids is God’s way of reminding us of the important principles that we sometimes forget over time.